They could also be losing money in the short term while value-adding the property (before they can increase rents and NOI).

Personally If you like your current residence and hope to stay there long term I would forgo major improvements on my primary and use all investment savings to make you more money and cash flow. 

How strong is the demand for mid-term in Denver?

I read this as someone using a short-term lens to focus on a long-term issue. 

In real terms you would walk away from an investment long before a primary residence and therefore most banks will not allow it for anything less than 10%.

For example I know many who are now just lending because they are getting 10-12% short term which is far better than any cap rate on real estate. you do not have the equity upside as you do real estate but its a way to play the short game to see what happens over the next 12-24 months and decide when you want to buy.

Quote from @Jake Bute: Good Afternoon,I listened to Wheelwright's podcast the other day discussing how short term rentals do not have the same rules as long-term rentals when it comes to some of the tax laws around active/passive investing.

Hello Joshua, we invest in West Texas area, all short-term rentals (4 1/2 years experience).

The six month cd isn’t the point my understanding is that I can’t just take out the HELOC, I need to actually use the money for my plan to work and a short term CD seemed safe and reasonable 

TECHNICALLY, this falls within the long-term laws because there are only 2 categories - long-term or short-term.